Tag Archives: etf

Allianz Makes The Case For Alternative Investments

By DailyAlts Staff With interest rates at rock-bottom lows, the three-decade bull market in bonds is clearly in its last days. Meanwhile, stock markets from Asia to the Americas are undergoing various bouts of volatility, and valuations remain stretched, indicating recent bearishness may be far from over. These factors, along with the diverging policies of world central banks, are causing investors in traditional assets to rethink their allocation strategies. Allianz Global Investors makes “The Case for Alternatives” in the latest edition of the firm’s Analysis & Trends white paper series. Financial Repression Financial repression occurs when real interest rates are negative. In this way, savers can’t grow their wealth merely “risk-free,” and thus they’re forced to choose between losing ground to inflation or investing in riskier assets. Typically, financial repression has been the result of inflation outpacing the nominal interest rates on government bonds. But due to unprecedented monetary experiments, most European nations now have negative nominal yields on their sovereign debt. This isn’t something traditional “60/40” investors ever bargained for. (click to enlarge) Obviously, bond investors need to look elsewhere for income when they’re faced with negative nominal yields. According to Allianz, this has resulted in the growing popularity of “low-risk, low-return” alternative strategies to replace the role that bonds once played in investors’ portfolios. Monetary Consequences The negative yields on European bonds are a direct consequence of the European Central Bank’s policy of “quantitative easing” – i.e., buying bonds with newly minted money. When the central bank expands the money supply to buy bonds, it bids down interest rates. This not only props up the bond market, it also lowers the risk-free rate of return, thereby encouraging investors into riskier assets – like stocks. This is why Allianz says “ongoing expansionary monetary policy globally” should “support risky assets longer-term” – but in the meantime, “investors should be prepared for increasing volatility.” The Alternatives Universe Allianz GI points out that “alternatives” are not an asset class of their own, but a “universe” of investments that includes all of the following (and more): Commodities Currencies Real assets (timberland, fine wine, art) Intangible assets (patents, royalty streams) Private equity Alternative strategies The graphic below plots a variety of alternatives on two axes: The up/down axis considers liquidity from the perspective of the investor and the investment vehicle, while the left/right axis considers liquidity in terms of the underlying assets. For example, ’40 Act long/short equity funds are liquid from the perspective of the investor, and also in terms of their underlying assets. But while publicly traded REITs are just as liquid from the investor’s perspective (or nearly so), their underlying assets are far less liquid. Choosing the Right Alternatives Alternatives should be attractive to investors who realize the traditional “60/40” stock/bond diversification is unlikely to provide its traditional benefits going forward. Bonds are set to lose ground as interest rates rise, and stocks, which had been pumped up by monetary accommodation, are likely to come under increasing pressure, too. Whereas the income from bonds used to provide a cushion for “60/40” portfolios, even during bear markets, the ultra-low yields on U.S. and especially European bonds won’t have that effect in the immediate future. The question, then, is which alts should investors consider? According to Allianz, investors have two choices: Allocate broadly to alternatives via a custom advisory service; or Add single alternative strategies in order to achieve a specific investment objective. Allianz breaks down the alternative strategies pursued by hedge funds into four broad classes: Event driven, relative value, macro, and long/short equity. Given each strategy is designed to provide returns with limited correlation to the broad markets, and the broad markets have been bullish for years, the coming volatility and presumed end of long-time bull markets in stocks and bonds should result in a positive environment for many alternative strategies. For more information, download a pdf copy of the white paper .

Gas Natural’s (EGAS) CEO Gregory Osborne on Q3 2015 Results – Earnings Call Transcript

Gas Natural Inc (NYSEMKT: EGAS ) Q3 2015 Results Earnings Conference Call November 10, 2015, 1:00 pm ET Executives Deborah Pawlowski – Investor Relations, Chairman and Chief Executive Officer of Kei Advisors LLC Gregory Osborne – Chief Executive Officer, Director Jim Sprague – Chief Financial Officer, Vice President Analysts Operator Greetings and welcome to Gas Natural Inc. third quarter 2015 financial results conference call. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Gas Natural. Thank you. You may begin. Deborah Pawlowski Thank you, Adam and good afternoon, everyone. I apologize for the delay on the call today having just telephone technical difficulties. And we are glad that you are here for our 2015 third quarter earnings conference call. I do have with me Gregory Osborne, our President and Chief Executive Officer, Jim Sprague, Vice President and Chief Financial Officer and Kevin Degenstein, our Chief Operating Officer as well as Vince Parisi, our General Counsel. So we are going to go through a quick review of the third quarter results. Gregory and Jim have some formal remarks. Unfortunately we are really short on time today as well. So we won’t be able to go into a Q&A. You are more than welcome to give me follow-up call if you have any other questions. I can be reached at 716-843-3908. You should have the financial results released after market closed yesterday, otherwise it can be found on our website at www.egas.net. So for the Safe Harbor statement, as you are aware, we may make some forward-looking statements on this call during the formal discussion. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today’s call. These risks and uncertainties and other factors are provided on our earnings release as well as with other documents that are filed by the company with the Securities and Exchange Commission. These documents can be found on the company’s website as well or at sec.gov. So with that, I am going to turn the call over to Gregory to begin. Gregory? Gregory Osborne Thank you, Deb and good morning, everyone. I appreciate your time today and your interest in Gas Natural. It’s been another quarter of continue progress for us as we have made significant headway toward resolution of regulatory items and are moving toward completion of our asset rationalization program. Let me summarize some highlights for you. On the regulatory front, the stipulation and recommendation between Ohio utilities and the Commission Staff of the Public Utilities Commission of Ohio or PUCO was filed on October 30. All stipulations are subject to review and final approval by the Commission as is the case with this settlement. We believe this stipulation addresses the issues raised by last year’s investigative regulatory audit of Ohio utilities. We made excellent progress on our asset rationalization initiatives in the third quarter. As previously announced, on July 1, the first day of the quarter, we completed the sale of our Wyoming operations. The proceeds will approximate $17 million subject to closing adjustments and this sale resulted in a $3.4 million gain after-tax in the quarter. This is recorded in discontinued operations. We followed that sale with the announcement on August 5 that we reached an agreement to sell our Kentucky utility for just under $2 million subject to normal regulatory approval. Our Pennsylvania utility is also under agreement for sale. That divestiture is moving through the normal regulatory approval process and we expect to close it this quarter. Subsequent to the quarter-end, in October we sold our former corporate headquarters building for approximately $1.4 million monetizing another non-core asset. When the sales of our Kentucky and Pennsylvania utilities are closed, we would have completed our asset rationalization program. The divestment these non-core assets enables us to focus our energies and resources on our operations which have higher growth potential. In Montana and Ohio, we can leverage scale we the already have in those markets. North Carolina and Maine are both underserved markets where demand for natural gas is growing. Overall, we continue to grow our customer base with approximate 1,000 customers added in the third quarter, driven by increases in Ohio, North Carolina and Maine. And internally we are progressing with our SAP implementation. This will facilitate our access to data for decision making and provide consistency and productivity improvements across our utilities. There was still some noise in our financial results. So let me turn it over to Jim to review those details. Jim? Jim Sprague Thank you, Gregory and good afternoon, everyone. Thank you for joining us today. Our third quarter 2015 financial results reflect lower full service distribution throughput primarily due to warmer weather in most of our markets. Because of unusual expense items that impacted our results for the quarter, so we are going to present both GAAP and adjusted non-GAAP results. For the quarter, revenue decreased to $13.1 million, down $0.5 million on an 11% decline in full service distribution throughput. Let me break down the contributing factors by segment. Revenue from our natural gas operations segment decreased $1.2 million or 9% to $11.4 million. The primary driver of the decrease was lower prices paid for natural gas in Montana, North Carolina and Ohio. Since our cost of natural gas is a direct pass-through to our customers, it is neutral to gross margin. However, on a weighted average basis, the 17% decline in heating degree days and resulting lower full service distribution throughput has a direct impact on margins. Consolidated gross margin was $6.9 million in the quarter, down about 2%. In the natural gas operations segment, it was virtually unchanged as a $0.2 million downward adjustment of the sales volume used to calculate unbilled revenue in Ohio was almost entirely offset by a $0.2 million increase in gross margin in Maine attributable to higher transportation volume. Our consolidated operating expenses for the third quarter increased by $0.5 million compared with the prior quarter to $9.9 million. The increase was primarily due to a $0.4 million recurring asset impairment charge related to our former corporate headquarters building that we be sold in October as well as other nonrecurring professional service costs. Those costs were offset by a reduction in corporate expenses resulting from operational improvement initiatives. Adjusted EBITDA was $0.5 million, down just about $0.1 million from the third quarter of 2014. Loss from continuing operations on an adjusted non-GAAP basis was $1.4 million or $0.13 per share, compared with a loss of $1.2 million or $0.11 per share in last year’s third quarter. You can find reconciliation of GAAP to non-GAAP numbers in the news release. On a GAAP basis, loss from continuing operations was $2.3 million or $0.22 per share in the third quarter. Turning to the balance sheet. We had $3.9 million of cash at the end of the quarter, up from $1.6 million at the end of December. We expect to continue to grow our cash position as we move into the winter months. Upon final resolution number of our PUCO ratio, we plan to complete refinancing of our long-term debt, which does not come due until mid-2017. Subsequent to the end of the quarter, we obtained a $3 million short-term bridge loan. The helps with providing g additional liquidity until we get to higher cash flow of funds to ensure we can support our unusual expenses. Cash provided by operating activities of continuing operations was $12.2 million in the first nine months, up 42% over the prior period. This increase was primarily due to improvements in working capital management. Capital expenditures for the first nine months of 2015 were $8.3 million, down from $16.3 million in the first nine months of 2014. Currently we expect another $1.4 million in the fourth quarter of 2015. This year’s investments have been primarily focused on adding services to install Maine in order to systematically expand our customer base primarily in our growth territories. We have established a greater amount of discipline in our project selection and management processes, focusing our resources where we can effectively drive earnings. We are currently evaluating our plans for 2016, which will help determine the timing of the decline of these unusual costs so we can redirect cash to capital expenditures. With that summary, let me turn the call back to Gregory. Gregory? Gregory Osborne Thank you, Jim. We are executing our strategy to leverage our utility management operation and investment capabilities to capture greater market penetration and earn the highest level of turns where there are growth opportunities. I would like to thank you all for joining us for 2015 third quarter earnings teleconference. This is an exciting time for Gas Natural as we continue to execute our strategy to improve our earnings power. In closing, I would like to turn it back to Deb. Deborah Pawlowski So thank you again, everyone. And I apologize for our lack of time here today, but management is more than happy to entertain follow-up calls later this week. So if you give me a call, 716-843-3908, if you would like to schedule for a follow-up, I would be more than happy to accommodate. Thanks so much. Have a great day. Question-and-Answer Session Operator Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) 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Lipper Closed-End Fund Summary: October 2015

By Tom Roseen For the first month in seven equity and fixed income CEFs posted plus-side performance on average on both a NAV basis (+5.97% and +1.07%, respectively for October) and market basis (+7.50% and +3.41%). Year to date equity CEFs remained in the red for the fourth straight month, down 4.41%, while fixed income CEFs moved more solidly into the black, returning 1.54% on average on a NAV basis for the same period. For the month many of the major broad-based indices chalked up their best one-month return since October 2011, with the Dow Jones Industrial Average Price Only Index and the S&P 500 Composite Price Only Index returning 8.47% and 8.30%, respectively. Beleaguered Shanghai Price Only Composite and Xetra DAX posted a couple of the strongest returns in the global markets, returning 11.50% and 11.15%, respectively, for October as investors cheered easy-money news from both the Peoples Bank of China (PBOC) and the European Central Bank (ECB). Despite a weaker-than-expected jobs report at the beginning of the month, mixed economic data throughout the month, and a roller-coaster ride of corporate earnings reports, volatility-as measured by the CBOE Volatility Index (VIX)-fell 38% over the month to 15, remaining below the long-term average of 20. Investors appeared to shrug off a disappointing nonfarm payrolls report that showed the U.S. had added a lower-than-expected 142,000 jobs for September-below the consensus-expected 200,000-as investors perhaps realized the Federal Open Market Committee was probably not going to raise interest rates this year. As commodity prices rallied mid-month, the S&P 500 posted is strongest weekly gain for 2015. And while the Fed minutes’ discussing global risks kept the hawks in check, many felt the downside risk was on the mend. Ignoring a slight decline in industrial production for September, consumer sentiment rose in October for the first month in four. A surprise cut in interest rates by the PBOC, better-than expected earnings reports from a few heavyweight tech firms (Amazon (NASDAQ: AMZN ), Microsoft (NASDAQ: MSFT ), and Alphabet (NASDAQ: GOOG )), and hints from the ECB that further easing might be in the cards pushed stocks to a fourth consecutive week of plus-side performance and sent investors into risker assets for the month and out of some recently popular safe-haven plays. Battered energy stocks got a shot in the arm with the rise in commodity prices and on news the central bank in the second largest economy in the world had cut interest rates, sending Lipper’s domestic equity CEFs macro-group (+6.48%) to the top of the equity CEFs universe for the first month since August 2014. World equity CEFs (+5.46%) and mixed-asset CEFs (+5.03%) also fared well during the month. Treasury yields rose at all maturity levels along the curve after the Fed left the door open for possible rate increases later this year, with the largest increase witnessed in the six-month yield and the five-year yield, 15 bps each to 0.23% and 1.52%, respectively. For the first month in four all three fixed income CEF macro-groups posted plus-side returns, with world bond CEFs (+3.29%) leading the way, followed by domestic taxable bond CEFs (+1.19%) and municipal bond CEFs (+0.68%) as investors put some risk back in their portfolios. For October the median discount of all CEFs narrowed 157 bps to 9.58%-slightly worse than the 12-month moving average discount (9.50%). Equity CEFs’ median discount narrowed 91 bps to 11.29%, while fixed income CEFs’ median discount narrowed 160 bps to 8.41%. For the month 82% of all funds’ discounts or premiums improved, while 16% worsened.